Internet Of Things, Virtual Reality And Smart Cars Driving Chips To The Next Level

Flip on ESPN Classic when it’s airing an old NFL or college football game from the pre-high definition era. If your reaction is anything like mine, you’ll probably think to yourself, “How in the world did we ever watch sports like this?” The picture is grainy, the graphics archaic, and the sound quality poor. In retrospect, it’s hard to believe that it was an enjoyable experience for anyone.

Twenty years from now, we’ll probably wonder the same thing about today’s technology, even as the HD experience now seems almost perfect, especially when it comes to football, a sport that was almost surely invented with TV in mind. But things change and get better, as they always do, and other technologies, most likely virtual reality (VR) – and perhaps even augmented reality – will take the sports viewing experience to another level.

Certainly, this type of game-changing evolution won’t be limited to sports television production. The internet of things (IoT) market will continue to grow and take shape. Apple recently made sure of that, essentially announcing to the world that it will attempt to take over this space when it unveiled its new operating system, which included a new app called Home.

Ever since introducing the iPhone, Apple’s strategy has been to make its products and services an indispensable part of everyday life, whether it’s getting more fit, listening to music, consuming news or watching television. With Home, Apple has made it clear it wants to own more mundane, run-of-the-mill tasks, too, including locking and unlocking doors, adjusting a thermostat, making coffee or even ordering groceries.

It’s doubtful that the company will introduce a line of branded products as a part of this effort – you won’t see an iCoffee machine or an iRefrigerator, for instance. Instead, it will most likely seek to pair its existing devices with products made by other companies, to create more intuitive and easier-to-use household appliances.

Meanwhile, the automobile industry may undergo the most dramatic change of all. Everyone should be able to see the writing on the wall at this point: Driverless cars are about to become, if not ubiquitous, at least commercially viable – even as polling suggests that the overwhelming majority of the public is less than eager to share the road with unmanned vehicles.

Google has been pursuing this slice of artificial intelligence for years. Apple has also shown interest, as has Uber, which unleashed an ambitious self-driving experiment on the streets of Pittsburgh recently. And now more and more car makers are getting on board, including some companies that don’t exactly have a reputation for being on the cutting edge of technology, like Ford and GM.

Clearly, these innovations could bode well for the companies that can bring them to market effectively, whether it’s Samsung or Facebook making VR more mainstream, Apple taking IoT to the next level or Google transforming the world of cars and transportation. The biggest winner of all, however, may be lurking further behind the scenes. I’m talking about the ‘brains’ powering these breakthroughs – the chip companies.

Indeed, none of the advances mentioned above – and many others that are not – can happen without a massive upgrade in chip technology. Nvidia is probably best positioned of all the players in this market to deliver on that challenge, having already established itself as a top provider of graphic processing units (GPUs), which quickly convert code into graphics for computers, tablets, smartphones, gaming consoles and in-car displays. Very few developments, in fact, in the world of artificial intelligence occur without Nvidia having some role.

Intel could also benefit. Over the years, the company had made moves to diversify its business away from PCs toward mobile devices, and that effort is beginning to pay off. Also consider Skyworks, a semiconductor maker enabling a range of IoT functions, and whose success is tightly tethered to sales of the iPhone 7, which could exceed expectations in the wake of the problems that have saddled the Galaxy Note 7.

Any way you look at it, the next big thing in technology is VR, IoT and smart cars, and the biggest beneficiaries are going to be the brains that drive and communicate between these devices. This is an enormous opportunity as well as for the traditional PC business as we come to expect more processing and graphics power from our PCs.

Technological evolution drives societal shifts, going as far back as the wheel. The only difference now is the pace at which such shifts typically take hold – even ones that we don’t particularly think we need.

So if you think driverless cars represent an apocryphal, futuristic world that will never come to pass, think again. They are coming quicker than most of us can imagine. So, too, are VR applications that will revolutionize everything from sports to medicine, along with a flood of other devices that have the potential to upend our daily lives in both small and large ways. And what they all have in common is that they will necessitate new and more powerful chips.

Ross Gerber is CEO and president of Santa Monica, Calif-based Gerber Kawasaki, an investment advisory with approximately $465 million in assets under advisement.

By Ross Gerber

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

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